CFI costs and the IRS...

[killbilly]

This is a potentially dumb question, and please forgive me if you're snorting with derision as you read this...

If you hold a CPL, you are technically employable as a pilot, despite whatever minimums you may not meet.

Since you can make a pretty strong case for CFI/CFII making you more marketable and thus "furthering your profession" I'm wondering if the costs you incur obtaining the CFI can be deducted from your taxes as business expenses.

Naturally, it would be a deduction from the business itself, not necessarily your personal, but, as a CPL, if you set up a corporation called "Bob The Pilot" then contracted yourself as an employee, this could all work out.

I'm just wondering about the rules. I can't be the first person to have thought of this, and since it's probably not generally practiced, I'm sure there's a problem with the theory. But I'm wondering what it is.

Note: deductions like this only make sense if you make enough money to need to itemize - I know a lot of pilots do not, so maybe there just aren't that many who would fall into the category of something like this being useful. But I really don't know.

 

[drunkenbeagle]

Note: deductions like this only make sense if you make enough money to need to itemize - I know a lot of pilots do not, so maybe there just aren't that many who would fall into the category of something like this being useful. But I really don't know.

I have a reasonably well paid day job (I itemize). Flying costs will be a substantial tax write off for me next year. They will easily offset my flying income.

Talk to an accountant or tax lawyer.

But yes, generally any aircraft cost/training/unreimbursed expenses/mileage/etc can be deducted from your flying income.

 

[killbilly]

I have a reasonably well paid day job (I itemize). Flying costs will be a substantial tax write off for me next year. They will easily offset my flying income.

Talk to an accountant or tax lawyer.

But yes, generally any aircraft cost/training/unreimbursed expenses/mileage/etc can be deducted from your flying income.

Now the tricky part. What if your main source of income is not as a pilot - you have no actual income as a pilot, but anticipate it in the future? Can you still deduct the costs incurred for the CFI?

I realize most of you aren't accountants, but I'm curious.

 

[drunkenbeagle]

Now the tricky part. What if your main source of income is not as a pilot - you have no actual income as a pilot, but anticipate it in the future? Can you still deduct the costs incurred for the CFI?

I realize most of you aren't accountants, but I'm curious.

Maybe. You need an account or lawyer here. It all depends on what schedule your other income appears on. If you have other schedule C income, you are probably in good shape.

 

[PGT]

Another reason to get an aviation degree...you can write off the flight training as an education expense, not bad on $30,000.

 

[killbilly]

Another reason to get an aviation degree...you can write off the flight training as an education expense, not bad on $30,000.

Ex-squeeze me? What?

If you're pursuing an aviation degree you can write off the flight time as an education expense?!

If that's true, you have just potentially changed the course of the next year or two for me.

 

[PGT]

Ex-squeeze me? What?

If you're pursuing an aviation degree you can write off the flight time as an education expense?!

If that's true, you have just potentially changed the course of the next year or two for me.

Yep. Pro flight major...I need everything through CFI for my degree so all of the flying I did under 250 hours was building time for my commercial and I wrote it off as an educational expense( because I needed the CPL for my degree).

 

[CAP_Flyer]

It's my understanding that the tax write-off for education and training expenses pertains to your CURRENT occupation, not pursuit of a future occupation.

Paying for a type rating or recurrent-training I think falls under that umbrella of tax write-offs.

I REALLY wanted to use getting my PPL as an education write-off since it's with the intent on a future career (yeah, yeah, I've heard all the gloom and doom comments about that. ) and was told in no uncertain terms that the money I spent on getting my PPL was not tax-deductible. Whether or not it's a different story if it's part of a degree program, I don't know. But considering what flight training costs as part of a degree program as opposed to paying for it out of pocket from a ma and pa FBO, not sure you're really coming out ahead with the taxes.

 

[PGT]

killbilly,

I did some googling. Some people say you can write anything past comm. certificate, others say you have to be in the field to write off CFI.

 

[killbilly]

killbilly,

I did some googling. Some people say you can write anything past comm. certificate, others say you have to be in the field to write off CFI.

As part of a degree plan, though, since it's a requirement of the course, I would think it would definitely fall under an education expense. That part just makes sense to me.

Need to look into this further. Thanks for the tips.

 

[germb747]

Why not go to the source documents, rather than speculate about it. Granted, the tax laws change all the time, but here's what the 2008 IRS publications say about this issue:



Publication 535, Business Expenses, Page 43.

Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. This is true even if the education maintains or improves skills presently required in your business. For more information on education expenses, see Publication 970.


Publication 970, Tax Benefits for Education, Page 65.

Education To Meet Minimum Requirements




Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. The minimum educational requirements are determined by:

• Laws and regulations,
• Standards of your profession, trade, or business, and
• Your employer.

Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education.
You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work.
Example 1.
You are a full-time engineering student. Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. The education is not qualifying work-related education.

Example 2.
You are an accountant and you have met the minimum educational requirements of your employer. Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired.




Education That Qualifies You for a New Trade or Business


Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work- related education. This is true even if you do not plan to enter that trade or business.
If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business.
Example 1.
You are an accountant. Your employer requires you to get a law degree at your own expense. You register at a law school for the regular curriculum that leads to a law degree. Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business.

Example 2.
You are a general practitioner of medicine. You take a 2-week course to review developments in several specialized fields of medicine. The course does not qualify you for a new profession. It is qualifying work- related education because it maintains or improves skills required in your present profession.

Example 3.
While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. The program will lead to qualifying you to practice psychoanalysis. The psychoanalytic training does not qualify you for a new profession. It is qualifying work-related education because it maintains or improves skills required in your present profession.

 

[germb747]

Why not go to the source documents, rather than speculate about it. Granted, the tax laws change all the time, but here's what the 2008 IRS publications say about this issue:

Now, of course you should ask a tax professional about this, but my interpretation is that since your CFI training and certificate are required to meet the minimum requirements to qualify as a flight instructor, then it's not deductible. The cost of maintaining your qualification (i.e. CFI renewal clinics, etc) would be deductible. How they really expect the average Joe like you or me to understand all the complexities of the U.S. tax code, I have no idea. It's filled with silly stipulations and gotchas if you're going to write stuff off your income taxes. I really wish we would go to a flat sales tax or at least substantially simplify the IRS regulations. At least with a sales tax, you'd be taxed on what you consume, not what you produce.

Not to be too fftopic:

 

[subpilot]

It look like you could get a CFI and after you are hired as a CFI you could then pursue and write off your CFII and MEI expenses.

 

[germb747]

It look like you could get a CFI and after you are hired as a CFI you could then pursue and write off your CFII and MEI expenses.

Yea, I assume so.

 

[Roger, Roger]

How they really expect the average Joe like you or me to understand all the complexities of the U.S. tax code, I have no idea. It's filled with silly stipulations and gotchas if you're going to write stuff off your income taxes. I really wish we would go to a flat sales tax or at least substantially simplify the IRS regulations. At least with a sales tax, you'd be taxed on what you consume, not what you produce.

Not to be too fftopic:

That's crazy talk. Simplify the tax code? CRAZY.

 

[Bernoulli Fan]

The tax code is a lot like the FARs (wait, was it written by the same guys? ). I take a perverse pleasure in filling in all the boxes correctly on my tax return just as I enjoy totaling columns in my logbook.

I looked into this topic as well before I attended CFI academy. The code, as mentioned earlier, applies to your current profession. You must currently have a pilot job to deduct business expenses. CFII and MEI might be deductible. You should really consult a tax person.

 

[killbilly]

The tax code is a lot like the FARs (wait, was it written by the same guys? ). I take a perverse pleasure in filling in all the boxes correctly on my tax return just as I enjoy totaling columns in my logbook.

I looked into this topic as well before I attended CFI academy. The code, as mentioned earlier, applies to your current profession. You must currently have a pilot job to deduct business expenses. CFII and MEI might be deductible. You should really consult a tax person.

I read over the IRS pubs and there ARE some gray areas....it seems to be that there MAY be some educational expense deductions available through an accredited university program.

I've got a referral to a tax professional and I'm going to check into that this week.

 

[ETAV8R]

Please post what info you get from the "tax professional"